Why sustainability is crucial for telecom operator Sustainability means meeting our own needs without compromising the ability of future generations to meet their needs. When companies talk about sustainability, it often represents a holistic view of its impact on:
Environment Society People (employees, partners etc.) Business Like most big companies today, telecom operators face many external and internal challenges linked to sustainability, such as costs; compliance to non-financial laws and regulations; tough competition for recruiting talent; and increased pressure from investors. That is why sustainability is increasingly becoming a central part of the overall commercial strategy for many telecom operators and is more and more integrated into business units’ daily work and core business strategies. Sustainability is considered fundamental for long-term success as it helps to grow the business, avoid cost and risk and/or increase employer branding.
Business growth Business growth strategies rely on:
Increasing the customer base Selling more to each customer (either in quantity or upselling more offerings) Increasing the price of the offerings Recurring revenue models Sustainability can be a driver for telecom operators for all these growth strategies towards both consumer and enterprise customers, through direct and indirect business opportunities. New technologies pushed by the telecom operators, such as 5G and Internet of Things (IoT) are enablers of more sustainable behaviors for companies and for individuals.
Enterprise customers need sustainable solutions for the same reasons as the telecom operators themselves, such as achieving more top line, improving bottom line, abiding by laws and regulations etc. In IoT, there are many new ecosystems of companies innovating in sustainable solutions that aim at reducing waste in different forms and the telecom infrastructure is an enabler for this innovation. Independently if the telecom operator choose to play a driving role in the value chain or to take a more enabling and indirect approach, there is sizeable growth potential from new sustainable business opportunities, such as energy optimization through smart meters, smart lightning and Heating, innovative Ventilation and Air Condition (HVAC) systems or agriculture solutions that reduce water consumption and use of pesticides. In addition, sustainability also has the potential to substantially boost telecom network usage as a wide range of sustainable offerings are also “smart” and connected, such as electric cars (cleaner energy), real-time ride-sharing (reduced consumption) and high-precision manufacturing (waste reduction) to mention a few.
Furthermore, many studies show that consumers, in general, are willing to pay more for consumer products that have a less negative impact on the environment and society. There is no reason why that should not also be true for telecom operators. The “greener” or more sustainable a brand is, the easier it will attract new customers and the higher price it can maintain compared to its competitors. However, any company must be careful with over-communication around sustainability and Corporate Social Responsibility activities. A responsible brand often has more success with its “green” positioning when being honest about the challenges it faces, the targets it is working towards and its actions. “Green-washing” is often spotted by consumers and watchdog organizations and can cause the opposite impact on the brand value than the wanted one.
Employer branding Attracting and retaining talent is necessary to constantly innovate and deliver satisfying results in the long-term for any successful company, which drives focus on overall employee satisfaction. The telecom industry needs pretty much the same talent profiles as “new tech” companies, such as developers, product engineers and skilled sales profiles and the telecom operators are competing with companies with attractive products, youthful brands, strong finances, and flexible working conditions.
After years of consolidations and cost-cutting in the telecom industry, the employee age distribution for most telecom operators is more of a diamond shape, rather than a pyramid and this can cause an unbalanced salary structure and difficulties in the future to find the right seniority and competencies for key positions. For example , the median age of telecom employees in the US in 2020 was 43.9 years and only 27 per cent were below the age of 35. The same year, Millennials made up 35 per cent of the workforce globally and by 2025, 75% of the global workforce are expected to be Millennials, who are in general more health-conscious, socially aware, and environmentally responsible than previous generations. According to Gallup’s report on How Millennials Want to Work and Live , they want to work for organizations with a mission and purpose, for companies that care about the environment and the society and that treats their employees fairly.
Also here, honesty and truthful communication around sustainability challenges, actions and targets are to prefer. This is a group of talent that will be happy to contribute to improving identified issues if there is a willingness to let them. However, they will most likely leave in case they do not feel that the communication is not sincere. Integrating sustainability strategies into the day-to-day business strategies and honest communication around challenges and achievements will help telecom operators to attract and retain the talent they need for the next decade’s success.
Sustainability to avoid cost and risk Even though investing in sustainability can bring many upsides for an organization, it is becoming more and more a must-have, stemming from pressure from investors, cost and productivity reasons, or to comply with laws and regulations.
Most telecom operators are under pressure to reduce the cost of their operations and whereas sustainability is often perceived as a cost to companies, it can also bring substantial savings. The GSM Association estimates that telecom operators today account for 2 to 3 per cent of the total global energy demand and estimates that it will increase despite the savings in energy consumption that the 5G-new-radio standard brings. Many more mobile stations will be needed to meet the expected exponential growth in data traffic from 5G connected devices, as well as the growing demands of edge capacity for high-performing services. More and distributed sites will lead to higher energy requirements and more energy transmission loss than a more centralized distribution of data.
McKinsey estimates that the average energy cost for telecom operators represents approximately 5 per cent of operating expenditures and that most telecom operators could achieve energy savings of 15-20 per cent in a year’s time frame. A 15 per cent savings on the industry level would represent approximately 100 000 GWh/year, which is about the yearly energy consumption of the Philippines. McKinsey also shares some good insights on where the biggest saving opportunities lie :
Artificial-intelligence-driven sleep and shutdown – with quick-wins in the radio access network (RAN) in the mobile sites where AI analysis of traffic patterns can allow for quick, automated decisions on the parts of the system that can be put into sleep mode or shut down. Internet of Things–based energy optimization – smart meters, enabled by IoT, allows us to measure energy consumption accurately, track it and report it. That creates an opportunity for the operators to optimize consumption, uncover potentially costly anomalies, identify theft, and optimize price negotiations. Structural and architectural transformation – energy is the primary source of cost savings when decommissioning legacy networks and when migrating to cloud-based solutions. Strategic and sustainable energy sourcing – as such a significant consumer of energy, the telecom sector can also be a driving power in the transition to clean energy through sustainable sourcing strategies and generation of energy where it makes sense. Other internal sustainability initiatives, such as re-use and recycling equipment, reducing water consumption in factories and offices or reducing office space and daily commute thanks to increased homeworking will not only have a positive impact on the environment but also bring cost savings in real estate or rent, utilities, cleaning services, food etc. In addition, it can be an opportunity to foster well-being and employee engagement.
Sustainability is also important for attracting investors, both for debt and equity. Around 50 per cent of the investors choose to focus at least part of their investment portfolio on companies with good ESG ratings (Environmental, Social and Governance) according to research by Quilter. The drivers, in addition to creating a positive impact with their investments, are to mitigate risk and maximize long-term success. Despite different ESG rating agencies often resulting in incoherent outcome and a lack of alignment in measurements, ESG ratings play an important role for public companies to attract and satisfy investors.
When it comes to laws and regulations regarding sustainability, the rules are the same as for most other industries. For example, the EU requires listed companies with more than 500 employees to comply with the new Non-Financial Reporting Directive (NFRD) based on a unified Green Classification System called “EU Taxonomy ” from December 2021 onwards. This is a step towards harmonization of metrics, which in the long run will simplify the work with sustainability for companies. In terms of local laws and regulations, the EPS (Environmental Policy Stringency) Indicator from OECD is a good pointer for how stringent the environmental policies and regulations in a country are. For example, the US and the UK are slightly less stringent than the OECD average and Northern EU countries are on average more stringent.
Maximize the impact of sustainability work through a holistic approach To summarize, there is a great opportunity for telecom operators to gain additional value from their existing work with sustainability and Corporate Social Responsibility (CSR), by integrating it into the overall commercial strategy and regular business planning. With a holistic view, the results can be maximized across the entire organization, generate revenues, reduce cost, and help attract talent – all while doing good for the employees, the shareholders, the society, and the planet.
Source: https://blog.outvise.com/how-can-telecom-operators-leverage-sustainability-in-their-business-strategies/
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